Thursday, May 2, 1996

Today the Department of Corrections announced that it is withholding payment of $2.0 million to its prime contractor in the development of its inmate tracking computer system. The department has insisted upon contract standards being met in the design phase being developed for its Correctional Management Informational System (CMIS).

Working under the provisions of the contract with TRW, the Department is negotiating to resolve its concerns about the quality of the design phase. In order to comply with the Wilson Administration's policy to ensure efficient and effective management of information technology project development, the Department of Corrections will withhold payment of $2 million to TRW until the second phase specifications of this multi-phase contract meet the requirements of the contract.

"I am committed to ensuring that CDC does not pay for a substandard product," said Corrections Director James H. Gomez. "The Department has every right under the provisions of the contract to demand a complete product and I know that a company with the reputation of TRW will do everything it can to see that our concerns are addressed." The fixed-price contract with TRW calls for the development of a "fully operational" system that will be completed in five major steps: analysis of the departments needs and objectives, design of the project, building the project, documenting and implementing the project and turnover of the completed system to CDC.

To date, CDC has paid out $2 million (less than 5 percent of the contract cost) for the successful completion of the first phase of the project, the analysis phase. This was the first and only product for which TRW has received payment. The analysis phase information has been used in the design phase of the CMIS project.

In March 1995 TRW started the $40.1 million contract, in which they agreed to design and build the system to departmental specifications within 28 months. When completed and operational, CMIS will streamline information management services within the largest correctional system in the country.

In August of 1995, at the end of the analysis phase, CDC met with TRW and identified those issues that may have caused the project to expand beyond what was included in the contract. At that time minor adjustments were made and agreement was reached that the project was within the scope of the contract.

The Department of Corrections, which signed a contract with TRW in December 1994 for the design and development of the CMIS system, has coordinated its oversight of the project with John Thomas Flynn, California's newly appointed Chief Information Officer.

In accordance with the policy established by Flynn, all major computer systems under development in the state have been assigned Independent Validation and Verification (IV&V) contractors, whose job it is to evaluate the projects and report on the feasibility of the primary contractor's plans and budgets. IV&V, which is also commonly called Quality Assurance, is a process that is widely used in the private sector but, until this year, has been under-utilized in state government computer system development.

CDC was the first state agency to hire a "success partner," as part of the IV&V program. The department's success partner, Logicon, a private sector technology company, performs independent verification and validation on the CMIS project. When TRW submitted its design phase deliverable, it was reviewed by CDC staff and Logicon. They found the design specifications submitted by TRW to be incomplete, inaccurate, and inconsistent. A formal letter rejecting the design was sent to TRW on March 22, 1996.

"This is exactly why we have IV&V teams in place--to identify flaws that the primary vendor has missed and the department does not have the expertise to catch," said Flynn. "In the past, this type of 'course correction' would have been very difficult. These types of problems may not have been identified, or if identified, may have been ignored for years, making them exponentially more expensive," Flynn added.

TRW was asked when they would be submitting the properly completed design, which was originally due before December 1, 1995. In response, TRW indicated that it would take them several more months and the entire contract performance would be delayed 13 months. Also, they claimed that the project was going to cost the state an additional $12 million.

Gomez explained that, "To date the state has not been presented with an acceptable reason for the cost increase or all of the time delay." He added that, "TRW is contractually obligated to deliver to the department, a fully operational computer system at the price agreed to in the contract."

The new automated CMIS project was approved by the Department of Finance in 1992 and subsequently funded by the Legislature. The TRW contract is the largest single portion of the project. The remainder of the project development includes establishment of the system and training of staff so that it is fully operational in all of the state's prisons and correctional institutions.

Department of Corrections, the California Department of Information Technology and the Department of General Services are working jointly to ensure the state's interests are protected.

Questions concerning the Department of Information Technology should be directed to Rich Halberg at 657-0318.